Daily Currency Update

Get access to our expert daily market analyses and discover how your currency has been tracking with our exchange rate tools.

US Dollar Index Lost 2% in December

USD - United States Dollar


The U.S Dollar Index lost 2% in December, attributed mainly to better risk tolerance (U.S-China phase one confirmation) and stabilization of world data, particularly in Europe and Asia. However, new geopolitical risks arising from both the middle east and North Korea regions, are likely to support the USD in the short-term, despite the recent U.S forward indicating data points (PMI’s) hinting to a slow down.
A major escalation of U.S – Iran tensions last Friday with U.S officials confirming a drone attack on a vehicle convoy at a Bagdad airport which killed Qassem Soleimani, a major Iranian general in the Islamic Revolutionary Guard Corps and Abu Mahdi Al-Muhandis, an Iraqi-Iranian military commander. Iran has since vowed revenge against America and has stated that they no longer consider themselves bound by the 2015 nuclear agreement negotiated with the U.S. and other world powers.
On reports of the death of the Iranian general, Oil spiked +5%, with the S&P 500 posting its most significant loss in a month. A search for safe-haven assets drove Gold, JPY, CHF, and Treasuries higher. The Euro also remained elevated against most of its peers (ex-CHF & JPY), including the USD, which is traditionally regarded as having a higher beta to risk-off environments than the former. Oil-linked currencies such as CAD and NOK are in a tug-of-war between the risk-off environment and the benefit from higher oil prices.

Key Movers

The signing of phase one U.S – China trade deal is expected to take place at the White House on the 15th of January. Although interestingly, both sides have yet to officially confirm China’s Vice Premier Liu He’s visit to Washington.
USDJPY may test its October low of 106.48 as risk-off grips markets after a U.S airstrike killed a top Iranian commander in Baghdad. The pair fell 0.5% to 108 on concerns other nations may be drawn into the conflict between the U.S and Iran. The market is seemingly pricing an escalation of tensions with gold hitting a six-year high on Monday of $1,567.26 an ounce.

Expected Ranges

EUR/USD: 1.1157 - 1.1205 ▲

GBP/USD: 1.3062 - 1.3175 ▲

USD/CAD: 1.2963 - 1.2991 ▼

AUD/USD: 0.6925 - 0.6958 ▼